Asia’s Growth Potential as an Apparel Sourcing Base—Discussion Questions from FASH455

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#1 In 2017, over 75 percent of U.S. apparel imports came from Asia (including around 35 percent from China, 13 percent from Vietnam, and 6 percent from Bangladesh). Based on the readings and our class discussions, why or why not do you think Asia’s market share may continue to rise in the years ahead?

#2 Vietnam is often treated as the “next China” for apparel sourcing. However, some argue that Vietnam’s export potential for apparel could be more limited than we anticipated because of its small population size. What is your evaluation?

#3 It does not seem U.S. companies have a particular role to play in the Asia-based textile and apparel supply chain because of the “flying geese” pattern. What is your view?

#4 If U.S. and China were able to solve the trade dispute by early next year, would sourcing from China become popular again among U.S. fashion brands and apparel retailers? What are the most critical factors that drive China’s competitiveness as an apparel sourcing base in the next five years? Overall, is “Made in China” over?

[For FASH455: 1) Please mention the question number in your comments; 2) Please address at least two questions in your comments]

Author: Sheng Lu

Professor @ University of Delaware

13 thoughts on “Asia’s Growth Potential as an Apparel Sourcing Base—Discussion Questions from FASH455”

  1. #1. I think Asia’s market share will continue to rise in the years ahead. A key factor behind Asia’s rising influence is the size of its economy. Asia has served as a factory source for companies in the West. Asian economies have immensely benefitted from being a part of global chains and that does not seem to be subsiding anytime soon. Due to this, it can be assumed that Asia’s market share will only continue to increase in the future.

    #2. I believe that Vietnam does ultimately offer a lot of export potential and growth in terms of apparel sourcing. I think that because the population in Vietnam is so small and limited, it creates an obstacle for them in regards to labor during the manufacturing process. Exporting apparel to other countries can be a stressful process due to high demand from consumers and the “fast fashion” mindset. Without the ability to acquire a decent sized labor force, the manufacturing process could be slowed down and less efficient.

    1. good thoughts. like you said–Asia’s market share may continue to rise, however, at the same time we know China’s market share is dropping and Vietnam’s export potential is limited too. So which country will be the new engine supporting the growth of Asia’s apparel exports in the next 5 years and why?

      1. I feel that the United States might be the new engine supporting the growth of Asia’s apparel exports in the next 5 years due to the fact that the United States is known for being an importing country in terms of apparel and has the ability to finance the apparel exports from Asia.

      2. referring to Nicolette’s comment: very good point! However, data kind of suggests otherwise: in 2017, about 52.6% of apparel imports by countries in the Western Hemisphere (countries in North, South and Central Ameria) come from Asia, which however was lower than 53.4% and 53% in 2015 and 2016. Somehow I feel there is a capacity limit out there. (https://www.just-style.com/analysis/how-regional-supply-chains-are-shaping-world-textile-and-apparel-trade_id135021.aspx) Welcome for any follow up comment.

  2. 1. I think Asia’s market share may continue to rise in the future because it has a growing economy and its GDP growth is known to be much higher than in areas of Europe and the United States. There is also a growth in Asian consumers. Asia is expected to grow and prosper up until year 2030 making them a competitive market to China and the United States. Asia will continue to be the leader of global growth now and in the future.

    2. Vietnam’s population growth is slowly declining. China’s economy is much larger than Vietnam putting Vietnam lower at stake and in competition. I personally don’t think Vietnam has the potential to grow as large as China’s population considering it is at most 15 times bigger therefore I don’t feel it can become the “next China.” Vietnam may have potential in the future to grow almost the size of China but not as large as it is today and in the future considering their decline.

  3. #1 In 2017, over 75 percent of U.S. apparel imports came from Asia (including around 35 percent from China, 13 percent from Vietnam, and 6 percent from Bangladesh). Due to our readings and class discussions I believe that Asia’s market share will continue to rise in the years ahead because they have a rising economy, and are a need for western countries especially in terms of manufacturing for the apparel industry. Asia will continue to rise in being competitive, a key supplier to western countries, in GDP.

    #2 Vietnam is often treated as the “next China” for apparel sourcing. Vietnam’s export potential for apparel could be more limited than we anticipated because its small population size. Due to China’s large size Vietnam won’t be able to produce the same amount of goods with employees. Vietnam could surpass China with advancing technology because they would be able to produce goods faster than humans. Although there is an opportunity for Vietnam to advance in technology they most likely will not surpass China with this either because they are not as capital intensive as China.

  4. #1 In 2017, over 75 percent of U.S. apparel imports came from Asia (including around 35 percent from China, 13 percent from Vietnam, and 6 percent from Bangladesh).

    Based on the readings and our class discussions, I think Asia’s market share may continue to rise in the years ahead because Asia have a complete set of supply chain. I believe that it will continue to grow as time progress because the “Flying Geese model” in Asia has a dynamic division of labor, which means that what each country is making are constantly developing and changing. With that being said, Asia has a fast changing supply chain. The more advanced economies undertake more capital/ technology intensive production process like Japan, while China and India stepped up and took over the apparel manufacturing roles where Hong Kong and Korea used to be in. With this dynamic pattern, we can predict that in several years later, Asia’s market share will just keep on growing.

    #3 It does not seem U.S. companies have a particular role to play in the Asia-based textile and apparel supply chain because of the “flying geese” pattern. What is your view?

    I agreed! I think Asia already have a well developed set of supply chain model that I don’t necessarily see a spot for the U.S. to play in the Asia-based textile and apparel supply chain. I believe that Asia is a very big continent, and there lots of nuances in countries that they have not yet come into play and develop.

  5. #1 I believe Asia’s market share may continue to rise in the years ahead. It is because Asia still has lots of developing countries that are able to provide a large number of labors and low production cost to the textile and apparel industry. Even China will not be the largest apparel supplier, but the apparel industry will transfer to other low-cost Asia countries according to the “flying geese” industry pattern. While the US and Europe have less competitiveness as less developing regions and higher labor wage level.

    #4 I think if the US and China were able to solve the trade dispute by early next year, sourcing from China will not become popular again among the US fashion brands and apparel. Based on what we learned, the development of the textile and apparel industry is related to the economic condition in one place. Thus, Chinese textile and apparel industry is changing from labor-intensive to capital-intensive followed by the rise of the economy. This means China will not dominate the apparel industry in the future. Based on the “flying geese” pattern, other Asia least developing countries will dominate the apparel industry. China will still produce some apparel products but will be much less than before, so it can be said that “Made in China” is over.

  6. #1: Based on class discussions, the readings, and current events, I think that Asia’s market share will continue to increase throughout the next decade. Many economies in Asia are developing at high speeds, such as China’s. However, there are countries on the rise as well, such as Vietnam and India. Despite the fact that Asia is growing economically and will probably continue to keep a large share of the market, I can’t help but wonder if the wave of protectionism from many developed nations will hurt Asia’s growth. The recent changes in NAFTA have been making strides towards keeping everything in the Western Hemisphere supply chain. Imports from Asia were 75% in 2017, but will the renegotiation of NAFTA encourage companies to keep their supply chains in the Western Hemisphere? I think that this could have a huge affect on the way the U.S. imports goods, which will in turn affect Asia’s exports and growth.

    #3: I think it’s difficult for the U.S. to play a role in the Asian supply chain because of the flying geese model. This model encourages Asian countries and their industries to keep their supply chain in their own hemisphere. However, the U.S. is a member of NAFTA and CAFTA, which is supposed to encourage companies to keep things in the Western Hemisphere. Imports from Asia still make up 75% of our imports despite this. Although the U.S. has robust industries, especially in textiles, I don’t think we will ever be able to play a major roll in their hemisphere’s supply chain because of the flying geese model. This could potentially hurt the U.S. while also increasing competition. With the emergence of three very distinct supply chains, it will be hard, and even more expensive, for each hemisphere to trade with one another.

  7. 1. Asia’s market share will continue to rise as China remains the top exporter to the United States. The economy is developing greatly, and is technologically advanced. Asia still has many countries that are developing, with low labor costs which are appealing to retailers.

    2. Vietnam’s population growth is on the decline. China’s economy is larger than Vietnam putting Vietnam at a lower stake in the competition. I don’t think Vietnam has the potential to grow as large as China’s population, since it is 15 times bigger. I don’t feel as if it can become the “next China”. Vietnam may have the potential to grow in the future to the size of China but not as large as it is today, but in the future considering their decline.

  8. 1. As we’ve seen throughout the past few years, Asian markets have begun to put a heavy emphasis on raw materials, manufacturing, and services. These three important factors, along with new technology, industries began to build infrastructure. Brands and sourcing managers like to outsource products from Asian countries because of all these factors and the low costs provided. If they continue to offer low costs and well oiled machines of factories, I believe that most apparel will be imported from Asian countries, even more than there is now.
    2. Although Vietnam’s population was on the rise, it has begun to stop increasing. It’s current population is 95.54 million as of 2017, while China has a population of 1.386 billion. That is approximately 19 times as many people who will occupy jobs that could be used for the sourcing industry. Even though Vietnams population has grown by more than 20 million over the last 20 years, I don’t believe that they have the ability to grow as big as China. As of how things are today, China is extremely capital intensive and invests money into technology in a way Vietnam is unable to.

  9. The issues with sourcing from Vietnam fall on TPP and increasing labor costs. Minimum wage is still very low in Vietnam, almost half of China’s. Next year it is supposed to increase by almost 7%. For the price, China offers better lead times and capacity of production. Executives enjoy the ease of doing business with China.

  10. #1 I think in years to come Asia’s market share will slowly decrease over a long period of time because of the industries habit of moving to where the cheapest labor is. If improvement are made to nafta more firms could move to other parts of the world like Mexico and expand to other parts of south America.

    #2 Vietnam could be a perfect place for improved AI technologies in the T&A industry because of its small size. Currently too many jobs in other parts of the world like Bangladesh and China depend on the T&A industry for job and if those job were eliminated by machines it would cause long lasting damages.

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